First Real Estate Investment Trust of New Jersey, Inc.

What they do

FREIT acquires, develops, constructs and holds real estate for long-term investment, primarily residential apartment and commercial retail properties in northern New Jersey and New York. It is externally managed by Hekemian & Co., Inc., its managing agent. Revenues come mainly from rental income at residential and commercial properties, plus additional rents at operating commercial centers. The company was reincorporated from a New Jersey trust to a Maryland corporation on July 1, 2021 and intends to continue qualifying as a REIT.

Revenue drivers

• Residential properties — Largest revenue line: $5.69 million of the $7.54 million total real estate revenue in the quarter ended July 31, 2026 ($16.80 million of $22.68 million for the nine months). Revenue rose on higher base rents even as average occupancy eased from 96.9% to 96.3%.
• Commercial properties — Second line: $1.85 million in the July 2026 quarter ($5.88 million for the nine months), up about $68,000 and $376,000 respectively. Nine-month growth was driven mainly by additional rent from TJ Maxx at Westwood Plaza after its co-tenancy clause expired.
• Investment income — Small non-rental contributor: $297,000 in the July 2026 quarter and $846,000 for the nine months, down $207,000 year over year.
• Tenancy-in-common investment — A loss line rather than a revenue source: loss on investment in tenancy-in-common was $37,000 for the quarter and $106,000 for the nine months.

Recent performance

For the quarter ended July 31, 2026, total real estate revenue rose 4.0% to approximately $7.5 million from $7.2 million a year earlier, split between $5.7 million residential and $1.85 million commercial. Net income was approximately $20.2 million, or $2.69 per share, versus $0.9 million, or $0.12 per share, driven mainly by the net gain on the July 8, 2026 sale of the Franklin Crossing shopping center. For the nine months ended July 31, 2026, revenue rose 4.2% to approximately $22.7 million and net income was approximately $21.7 million, or $2.90 per share, versus $2.4 million, or $0.32 per share. AFFO per share was $0.14 for the quarter and $0.51 for the nine months, both below the prior-year $0.23 and $0.62, while general and administrative expenses rose $752,000 in the quarter to $1.38 million.

Strategy

Management's stated long-range policy is to evaluate acquisitions that complement the existing portfolio, generate increased income and distributions, and raise portfolio value, using wholly-owned fee interests or joint ventures/tenancy-in-common where risk diversification warrants. Properties are generally held long-term, but the company may sell or trade assets to fund higher-return purchases or to divest properties no longer fitting its objectives. At the commercial centers, management and third-party advisors are working to attract quality tenants and explore redevelopment at Westwood Plaza and Preakness, where vacancy remains elevated, while Franklin Crossing (sold July 8, 2026) and Glen Rock have carried higher occupancies and stronger net operating income. Filings also reference a proposed sale transaction involving Westwood Plaza and a Plan of Voluntary Liquidation subject to stockholder approval. Certain loan extensions and refinancings have been at higher rates and shorter terms.

Risks

• Elevated commercial vacancy — Total average commercial occupancy was 41.7% in the July 2026 quarter (39.6% for the nine months, excluding Franklin Crossing), with Westwood Plaza and Preakness specifically cited as having elevated vacancy.
• Debt maturity and refinancing — Long-term debt was $114.2 million against $53.7 million of shareholder equity at July 31, 2026, and recent refinancings and extensions have carried higher interest rates and shorter terms.
• Interest rate and financing costs — Financing costs rose to $1.97 million in the July 2026 quarter from $1.81 million a year earlier, and 30-year fixed mortgage rates around 6.65% remain well above pre-2022 levels.
• Liquidation and sale-execution uncertainty — The 10-Q cites risks that stockholders may not approve the Plan of Voluntary Liquidation, that liquidating distributions and timing may shift, and that the Westwood Plaza sale may not close.

Outlook

Management describes the residential portfolio as continuing to generate positive cash flow, though it observes a modest but noticeable softening in rents/market strength and cites uncertainty from elevated interest rates and tariffs. It expects Franklin Crossing and Glen Rock to keep higher occupancies and stronger net operating income while Westwood Plaza and Preakness remain the focus of leasing and redevelopment efforts. The 10-Q flags the economic and financial environment as subject to uncertainty from rates, inflation, tariffs and trade policy, energy prices and geopolitical developments. It also notes the proposed Westwood Plaza sale and the Plan of Voluntary Liquidation as pending matters.